In the aftermath of some of the worst weather in recent history in the, the homeowners insurance industry and personal lines insurance in general has begun to focus much more on property lines. In the past few years, premiums have shot up nearly 20%. Many professionals across the insurance industry are predicting a time of policy change and upheaval ahead. However, customers can still rely on one of the oldest tricks in the book and benefit from bundling their policies. By doing so they take advantage of unique company discounts to save money, while at the same time their insurers can benefit from offering these options and enjoy better customer retention rates. Insurance companies often understand customers' attitudes toward bundling coverage and try to create unique opportunities for their clients compared to their competitors' options.

Studies have been done which have revealed that several factors influence the retention rate of clients. The client's tenure and bundle choice often reflect how likely that individual client is to stay with the company or look to shop his or her insurance. Research shows that the retention rate for homeowners insurance was near 90 percent between 2011 and 2012. Of this percentage, the number of retained customers who had bundled policies was 95 percent. Retention rates for customers who used multiple insurers was only a little more than 80 percent.

The fact that customers who pay for multiple policies with one insurer are more likely to stay with that company is a phenomenon that has remained consistent over the span of several generations. This study surveyed people who bought a combination of homeowners and auto policies. However, the retention averages were found to be even higher for people who had more than two policies with one insurer.

Customers who were insured with companies that did not offer multiple coverage options were not usually as certain to renew their coverage. However, more of the customers who had insurers who offered added benefits answered that they would definitely renew their policies. Offering the option and incentives to bundle auto and home insurance is usually the first and most important step toward building a long-lasting relationship between insurers and customers. In customer satisfaction surveys, clients who bundled two policies were more satisfied while the customers who were most satisfied had three or more policies bundled.

The study also looked at what specific products proved to be the most significant bundling options. In addition to the combination of homeowners and auto policies, personal liability umbrella coverage followed close behind. This type of coverage has a high bundling rate overall. Secondary residence insurance also had positive feedback. However, life insurance policies did not have a significant impact on retention relative to bundling. This is likely due to the uniqueness of life coverage and the fact that customers do not always have the option to transfer such policies to other companies. Nevertheless, the option of offering life coverage certainly does not create a disadvantage.

Understanding bundling trends and preferences of customers helps insurance companies market their products better and provide more efficient and beneficial options for their customers. It is also important to remember that a customer's income affects what type of coverage he or she is more likely to buy. For instance, people with higher incomes are oftentimes more likely to purchase umbrella coverage to protect their assets. On the other hand, younger people are more likely to bundle life insurance if the option is presented to them because they are frequently getting married, buying homes, and having children. Overall, bundling products with homeowners and auto coverage is something that both customers and insurers can benefit from. Customers who are interested in this option should discuss their concerns and needs with an agent.

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